If you are motivated to become a trader but have only a minimum knowledge of what trading is, these tips will help you out to play safe as a beginner. Trading is similar to purchasing a seed that can reap you fruits in the future with the right nurturing. When you start trading, the worst idea is to follow your guts for investments. You make a decent profit if you are lucky, but the odds of getting lucky in a trade market is fairly low when you have not done your homework. Here are top tips for trading as a beginner.
Knowledge is the key
The knowledge about the market and the basic trading procedures are important for you to make successful trades. Before you start investing, spend time learning about the trades and make mock investments to check out how you have improved. Make a note of the market you want to focus and the trading options in that market to start profitably.
Keep separate funds for trading
Always trade what you can afford to invest. Find out how much capital you can invest in each trade. Many professional traders risk only 1% to 2% of the account per trade. Do not fall into believing that one trade can bring you the entire fortune. It can keep your losses under control and will also teach you the right discipline of trading.
Find time for trading
Using automated tools for trading is not always effective. Sometimes you may find opportunities that your tool will not understand, but you know that it can get you profits. For such trades, you will need to invest your time to sit down and check the current market price. Especially when you are day trading, the opportunities can strike any time and making fast decisions is the only way to make profits out of them.
Avoid penny stocks
Even though we suggest that you start your trading with small stocks, you should stay away from penny stocks. These stocks are illiquid most of the time, and the chances of such stocks to rise can be next to impossible in maximum cases.
Be realistic about profits
Always remember that even though you use the best strategies, a profit is not guaranteed. There are several factors, including a recession that can affect the market. In a realistic approach, you can expect to win only 50% to 60% of the trades. The only thing you have to keep in mind is that you need to always be on the profitable side. Limit your risks with the right entry and exit methods.
Stick to a plan
The most successful traders move fast, but they are not always making fast decisions. They are simply sticking to their best strategies. Once you come up with your own formula, try to stick to it even when you become an advanced trader. It will give you the discipline of a professional trader. Do not let your emotions get in the way of your decisions and be patient with your plan.